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China, Pakistan power plant dispute at a breaking point

PESHAWAR – With China virtually halting the multi-billion dollar China-Pakistan Economic Corridor (CPEC) over differences in cost estimations and contractual disputes, the issue of overdue payments owed to Chinese independent power producers (IPPs) is near a breaking point.

Media reports claim Beijing is reluctant to pump in new funds under the CPEC arrangement until problems faced by Chinese investors are resolved and previous CPEC-related agreements are fully honored by Pakistan.

Last September, Pakistan pledged to pay US$1.4 billion due to Chinese power plants against accumulated owed dues of $2.3 billion during a meeting of the 10th Joint Cooperation Committee of the CPEC.

Islamabad also committed to opening a revolving fund equal to 21% of the cost of power generation.

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